FRANCHISED DEALER OR NOT (also called Authorized Dealer)
I have one word for you: recourse.
Forget cars for a minute. If your kid gets sick from coming into contact with a peanut, are you feeding him from a reputable restaurant with special menus, staff training and processes in place or street food like Asian dumplings being cooked in a back alley and the pots look like they were last washed in 1987?
If he gets sick from the street food, what’s your recourse? You’re going to hunt down the cook in China? What about at the brick and mortar restaurant in the middle of America with a corporate office to answer to?
Recourse for you translates to liability for a business. Liability means responsibility.
A major dealer doesn’t want bad press, they don’t want bad reviews, and they don’t want so many complaints that they risk their franchise status or operating license. In case you didn’t know it, not just anyone can open a dealership and officially carry a brand name. They have to be accepted by that car manufacturer and maintain their status. You want that.
They also usually have inspections above and beyond the legal obligation of making sure the car isn’t leaking fluids that could make it explode. I’m not being funny. The law says that the car can’t be leaking fluids and the brakes and tires need to be safe to drive. Different states/provinces have different levels of safety, but that’s the standard law: car shouldn’t be a hazard. Nothing more.
What you want is an inspection that goes above and beyond the legal “car won’t explode in the next 24 hours”. And you want to SEE that report. I’ll give you details on that in a minute.
IS IT POSSIBLE TO GET A GOOD CAR FROM A NON-FRANCHISED DEALER?
Sure, some independent dealers are still running good businesses. The odds just aren’t as good. And if you opt to go that way, the rest of this book will really help you by telling you all the things to look out for.
Don’t buy from a street corner seller. They are called “curbers”. Curbers are the reason some places have made car selling a licensed profession. You pass exams, you pay fees, and your dealership gets fined if you step outside the lines. That’s not just recourse, it’s punishment. But that’s good for the consumer. It helps bring down the lying a little.
I’m not trying to scare you. I have nothing to gain whether you buy from a dealer or curber or alien from outer space. I’m giving you the facts so you make an informed decision, or at least know what to look out for.
If not an authorized dealer, at bare minimum, find a legitimate business who has been around a while and has something to lose if you go to the Car Dealers Association and Better Business Bureau.
IF YOU GO NON-FRANCHISED DEALER:
Get a 3rd party inspection done for sure. Read the specific part about 3rd party inspections to not make the same mistakes EVERYONE makes on these and gets royally screwed.
BOTTOM LINE ON FRANCHISED OR NOT:
I’ve worked in both, I have friends who still work in and even own non-franchise, and I can tell you it’s not the same game. You’ve got a lot more recourse with a franchised dealer. A franchised dealer has more to lose and is motivated to make things right if a deal takes a left turn.
SKIP THE REHEARSAL
As well prepared as you think you are walking into a car dealership, even with your Oscar Award winning level of acting, here is the harsh reality: you only have the one act that you practice once, maybe twice every few years. We hear a different story every hour, every day, for the length of our careers. I’m on year 27, do you think I’ve heard one or two more strategies than you can come up with?
We know every variation, every angle, every approach. It doesn’t serve you to play the hard ball act. Your salesperson is your ambassador in your dealership, you want us on your side when it comes time to convince the manager to sweeten the deal for you or in some cases, make it happen at all.
We’re not out to get you. We work stupid hours, eat scraps on busy days, eat nothing on really busy days, and live on 100% commission. We want to make a great deal happen for you and earn repeat business from you. Your salesperson is not the enemy. The knuckleheads who write articles about “how to get your sales guy” have no clue. Think about how much sense it would make to take that approach with your lawyer and accountant. Yeah. Not a good idea.
Just become friends with us from the start. We will work harder for you and we might also point you to the better cars.
TRUE STORY: I once told a client if he wanted to buy the white car he came in for, I accidentally double booked and would have to let my colleague take care of him. If he bought the gray one I was suggesting, I could clear my schedule and handle it. His words exactly: “Are you saying what I think you’re saying?”
My response was: “I am an employee here and have nothing bad to say about any car. I just have a scheduling conflict if you want to go with the white one.”
The guy who ended up buying that white car has become best friends with his service guy and they go for beers every week after his service appointments – which have no end in sight.
My guy? I saw him a year later when he came to do an oil change and passed by to say hi. Maybe I’ll see him again next year.
Q: So, what does “better car” mean?
A: You see all the cars after they have had a heavy shampoo, dings banged out, paint retouched, bumpers replaced, carpets shampooed, sometimes even panels replaced and dog bites filled in. We see them before that and we often see the owners too. Cars that were trashed by the owner are usually not well maintained. But you would never know that looking at them in their renewed condition. And that’s just the synthetic part of it, but it tells us if it’s a vehicle that’s been used and abused.
The other part of that “before” picture is what the techs tell us off the record.
So let me ask you: how do you feel in your own life when a cocky jerk who treats you like scum is asking you about the worst car on your lot.
Do you feel like pointing him to a better car?
Do you feel like pushing your manager to give him a better deal?
Do you want to throw in some extras at your disposal or save it for the next customer who treats you right?
I’ve had comments like “used car salesmen are all the same”, “lying must be in your genes”, “you know I can’t trust you”. I’ve never figured out how a customer thinks it will help them to insult me. Is it a disarming mechanism? Cause that would be funny.
Clearly to be in this business we have to have thick skin, so why even try to unnerve us? It doesn’t work. All you do is annoy us and shoot yourself in the foot.
THE “EXPERT” FRIEND
Quick mention on the buddy you bring with you. I can’t count how many buddies I’ve watched talk their friend out of buying a great car. I mean GREAT cars. In their attempt to help, they sometimes feel like they’re not doing their job if they don’t sweat the sales guy or talk you out of the first few cars you look at.
When you bring that time-wasting buddy to our lives, it gets easier to turn off the conscience and sell you a bad car. Even I’ve had to do it a few times, just as payback for giving me a headache and making me lose time.
Think of your dealership like a dentist’s office. Now ask yourself if it’s a good idea to bring your rude friend to your dentist’s office to piss off the dentist just as he’s reaching for his needles and drill tools.
If your friend actually knows cars and can ask the right questions, by all means, have them help you. But if they’re there just for moral support, tell them to be mute so they don’t do more damage than good.
Don’t trust your salesperson when they say it’s a clean report.
Your salesperson is a starving commission-based guy who is constantly fighting the clock. Forget competition from other dealerships, he has to worry about the other polyester-wearing slick sitting 5 feet away from him who is trying to sell the same car at the same time to someone else (we don’t just make that up, cars get popular in cycles for some mysterious reason and we either get no interest or suddenly 2-3 buyers at the same time).
It’s nerve racking, and we need to close ASAP. This is used cars and we don’t have the luxury of just custom ordering another identical one like they do in new cars.
If someone beats us to the sale at hand, chances are you are going to go to another dealership that has something close to the car you first came in for. Chances are there aren’t two identical cars in the same color, with similar mileage, with the same options, as the one that brought you in.
Back to asking for reports. I had to tell you all that so that you can understand why your salesperson is going to hide things from you.
1) When you ask to see a report, try to follow the sales guy to the printer. Reports never say “page 1 of 32”, they just say page 1, page 2,… so when he goes to the printer and comes back with 2 pages that look like regular stuff, you have no way of knowing if 30 more pages are sitting at the printer (soon to be used for kindling wood). And believe me, there are WAY more cars with 20, 30, and even 40 page reports than you think.
2) Look at the dates on every service item on the report. If you are buying a 7 year old car and only see things from the last 6 months, you need to find out what happened the first 6 1/2 years.
3) Assuming you have the full history report, look for repeat offenses. Sometimes they’ll be technical and you won’t know what keeps breaking. Find out. Even if it’s a German term, find out. Google translate is an instant solution.
No one does this: ask for a copy of the “pre-certification inspection”.
Here is why: dealers will never re-condition a car without doing an inspection on it first. Not just an inspection, but full report on what the technician says should be changed. The sales manager then decides what he will or won’t spend money on. If it’s something that doesn’t pose a hazard, is within the law, and won’t “break” for another 6 months – you guessed it, he’s not going to waste money fixing it. YOU ARE. That very first report is something no one asks for. Ask for it.
If you see major issues were fixed, it doesn’t mean you don’t buy the car, but it means you might negotiate extended insurance and a better price too.
So there’s the first solid thing to negotiate. The magazine writers will tell you to get floor mats and they ignore engine and transmission. What a joke.
The smart buyer does two things here:
1) Make the dealer include a “full coverage” 2 year warranty on the vehicle (power train at least).
2) You now have real bargaining power because the car isn’t a “mint” car.
p.s. I keep referring to salespeople as guys. There are lots of ladies in the business and many of them are very good. In the spirit of making this the fastest read possible, please don’t sweat me for not making “him and her” referrals 1000 times as we go.
HISTORY REPORT VS INSPECTION REPORT
Know the difference between these 2 pieces of paper. Maybe drink some coffee before reading this part.
INSPECTION REPORT: tells you the status of the car today. The car goes through a 40-point inspection (or whatever number of points they cover at that dealership, it can be 100 point inspection). If everything is functioning, you get a big two thumbs up (and you will have that shiny report to doodle on when you are constantly at service afterwards swearing at your sales guy for selling you a crummy car).
HISTORY REPORT: (this is the thing dealers would love to see disappear) tells you everything the car has been through since it was born.
Pay close attention: something that is showing as perfect in the “inspection report” but has come up a half dozen times in the “history report” should raise red flags.
Depending on what the problem is, it might be a reason to pick a different car.
Repeat problems are common with certain cars in certain years and models. It doesn’t mean they’re a lemon, it means the manufacturers are rushed to keep releasing new models and don’t have time to iron out all the bugs before releasing. YOU become the beta tester. And, it could also mean it’s a lemon, but that’s not what I see 99 out of 100 of these.
I’m not talking recall either. A recall is a major known error that has a fix. Recalls are no problem.
I’m talking about the problems that have mechanics scratching their heads and you see your service guy so often that they come to your kid’s wedding.
Follow the time line here:
- a problem appears over and over
- the garage keeps fixing it
- the inspection report is done when the problem is in silent mode, so everything looks good
- you buy the car
- 3 weeks later “hey, where did this headache come from?”…
…the “inspection report” was perfect when you bought it. Of course it was. Everything had just been fixed.
The “history report” showed a pattern of that thing being fixed every few months. Which means that car is a ticking time bomb always ready to go off and you want to avoid it.
The problem was there the whole time in the history report (buried deep in the file). Your sales guy will bury that report the same way he buries the strip club receipt from his wife.
NOTE: when your sales guy tells you he doesn’t have access to that report, he’s not totally lying – it’s not in his computer, but it’s close by. Remind him that his service manager can probably access it. They’ll tell you they can’t but most of the time they can with the VIN number. He needs to walk over to service. VERY rarely is that report truly not available (cars imported from other countries won’t be in the system).
Most of the time the history report is sitting in the actual file in the cabinet behind the sales manager’s desk. It is going to silently travel from there to the business office to accounting and it will never see light of day.
You WANT the history report. It tells you the DNA of the car. It tells you whether you have an Olympian or a sickly child who’s been in the hospital every 3 weeks. Don’t let anyone talk you into buying that kind of headache no matter how much money you’re saving and how much they promise you the problem is fixed. Remember the movie 300? Discard. Pick another vehicle.
LEGITIMATE REASONS HISTORY REPORT IS NOT AVAILABLE:
1) Car is from out of country. Computer systems don’t cross borders. Sometimes it’s a dealer transfer for great reasons (like currency exchange makes it a great deal) so you’ll get a Canadian dealer sell to the United States – and they include a clean history report with the file. Otherwise, history report won’t be available.
2) You are not at an authorized dealer. Only authorized dealers will have history reports in their service department’s computer system. TIP: if the car is relatively within warranty range, take the VIN number to an authorized dealer and very nicely ask their service people if they can print out a history report for you.
3) The previous owner did not service at an authorized dealer. There’s some gray area here. Changing tires or brakes is one thing, but any work that is mechanical or electrical would void the factory warranty. If you are buying a 2-3 year old vehicle, history report should exist because no one would service a vehicle for anything serious and risk voiding warranty. If you are buying a vehicle 4-5 years and older, the owner might have started servicing at an independent garage since their warranty has expired anyways. And in all fairness, most people don’t even know a history report exists, so they wouldn’t know to keep it on file for resell.
Things can get shady when it comes to accidents. It’s possible your dealer doesn’t even know about it, so don’t curse them yet. A lot of people will never report an accident to their insurance company. They’ll get it fixed in a corner garage to avoid insurance premiums going up and the value of their car depreciating more.
First of all: if you think you are going to save a few bucks by buying a car from across a border, you might be asking for trouble.
An excellent body man can inspect the car top and bottom and usually tell you if something major has happened to the car, so that is a minimum precaution to take (be sure to read next chapter on 3rd party inspections).
As far as accident claim reports: call the company itself (like AutoCheck, CarFax or CarProof) and ask them how long it takes their system to update new claims. A car that got into an accident on a Monday might not have that claim uploaded until the following Monday, which leaves plenty of time to repair and sell the car while it is still showing a clean report.
The other thing is that a dealer will often appraise a car, run the accident claim report at the time of the appraisal, let’s say in January, but the client decides to hold off for a while. The salesperson generally keeps that paperwork in their drawer and pulls it out when the customer returns, which could now be March. A lot of things could have happened between January and March. A big accident might be the very reason the person decided to sell after all. The dealer might be completely innocent here and acting in good faith.
It is common for a client to come back months later. Them doing that doesn’t raise flags, so dealers usually don’t re-run that accident report.
Ask to see the accident report and look at the date on it. If it’s more than a few days old, just ask the dealer to re-run a new report on the vehicle. Easy solution and it might be illuminating. Or it might show a perfectly clean car and simply give you peace of mind.
Keep a copy of that report for your file. Not only will it be useful when the time comes to resell, but also if any unreported claims or accidents get discovered down the road, you have some recourse. In some places, the dealer now has a responsibility to compensate you for difference in value. So if a clean car sold for $30,000 and that same car with a claim would have sold for $25,000 then you might have a claim for $5,000.
This section might be giving you a headache. I know. It can’t be avoided. The car business is not as simple as it seems. Every car is different. Every deal is different. There are a lot of wise guys always trying to trick the system and they often do, just because they know the loopholes (like claims not being uploaded same day).
THE 2 TAKEAWAYS WITH ACCIDENT REPORTS:
1) Ask for a copy of the claim report and check the date. You want that date to be current.
2) Ask the dealer to put in writing that the car has been in no accidents.
INSIDER TIP: If the “computer is frozen” and the accident report is unavailable, you can put a deposit down and specify on ALL paperwork from deposit to offer that the deal is “pending clean accident report”. That locks in the vehicle you want but protects you and gives you reason to re-negotiate if something comes up. Do not sign final documentation or take possession of the car until you see the accident report!
INSPECTING THE VEHICLE YOURSELF
Here are the non-mechanical things you can easily inspect yourself:
1) Uneven paint. Avoid late night for this. Look at the car outside in broad daylight (showroom and warehouse lights can hide things). If the fender paint is lighter or darker or shinier than the door paint, one of them has been repainted for some reason. Look at the car in pieces (trunk, fenders, doors, hood). It might be nothing, maybe the car got keyed and there was no actual damage. Find out.
2) Look under the hood for shiny welding. If you are buying a 5 year old car, the engine will look like a 5 year old engine even if the dealership has shampooed it clean. Look for welding, look for shiny spots that don’t match the rest of the engine. Get the car up on a lift to look for shiny welding. You don’t need to be a mechanic. All you’re looking for is what seems out of place or like it was just recently “glued in”.
3) Use every function. Turn on the heater (even if it’s July), blast the air conditioner (even if it’s January in Alaska). Radio. Navigation. Park Assistant. Drop the seats down. Open the moon roof. If it’s raining bring the car into the car port or showroom and put the top down if it’s a convertible. Use every function of the vehicle no matter what time or season it is. 95% of the time I’ll see people bring down the visor, look at the mirror, and that’s the end of their inspection.
4) Check for leaks. If you drive the car into a high pressure wash or have their lot guy put their pressure washer on the windshield, doors, trunk, all the windows, and sunroof – you can be sure there are no leaks. The blind consumer wants to test drive a spotless car. The smart consumer puts water pressure on and sees if everything is tight. The older the vehicle, the more you need to check for leaks and loose seals.
5) Previously flooded cars. This is not just for states who are prone to hurricanes (where do you think those states ship their flooded used cars to? …places that someone wouldn’t even think of flooding as an issue… like Canada… thought you got a great deal buying a car from Mississippi? Surprise!)
Here’s how to check if a vehicle’s been flooded:
- Easy giveaway is mold or a damp smell
- Rust on the spare tire, crow bar, or door hinges
- Rust on the metal under the seats (small mirror gets you under there)
- Brand new carpet on the floors (I’m not talking mats, I mean actual carpeting from the factory replaced) or upholstery on seats. No dealer goes through that expense for no reason. Hole in the wall dealers don’t even do this and try to cover up flooded floors with oversized floor mats. Get your hands dirty: don’t just peak in a small corner, remove the floor mats and check what the factory carpet looks like. Shampooed is fine. Replaced is an issue.
- Water lines on the engine, radiator, wheel wells
- Finally, the dead giveaway – I can’t believe people miss this: the air filter. If they don’t bother replacing the air filter, besides having water lines from it being wet and then dried again, you’ll see debris from grass, trees, twigs, street litter. You’ll see litter trapped right in the filter or inside the air intake opening.
THIRD PARTY INSPECTIONS
Here’s how avoid getting double-screwed with 3rd party inspections: don’t hire a garage within 50 miles of the dealer. 100 miles if possible.
Dealers use mechanics and body guys to fix up their cars before they sell them. The guys they use are always within close range so that they’re not driving 2 hours every day when a car goes in or out. In some cases, up to 100% of that garage’s business comes from dealers. Do you think they are going to bite the hand that feeds them?
Those guys need to protect the constant business they are getting from these dealers so guess whose side they’re on? NOT YOURS. Hire someone as far away from the dealer as you can.
If they’re not willing to drive that far, tell the dealer you need to show the car to your spouse or parents or whoever and you need an extra long test drive by yourself and take the car to be inspected. Most dealers will let you take the car a few hours, even overnight. You just leave I.D. behind, like a photocopy of your driver’s license.
Let the games begin…
I will start with the bad advice you need to avoid from magazines and web sites. They tell you that your best negotiating tactic is to walk away. Do that if you are really prepared to walk away and the car itself doesn’t excite you. Otherwise, that’s bad advice.
My favorite thing about this business is putting great people into great cars and making friends for life.
My 2nd favorite thing about the business is the “hardball” negotiator who walks away and the pleasure I get from telling him the car sold to someone else an hour later.
You need to keep two things in mind about this tactic of walking away:
1) We’re talking about used cars. No two are exactly the same. So if you find the exact model you want, right mileage, right color, right options,…everything is perfect except you want to save a few hundred bucks so you walk away and risk losing the car. It MIGHT still be there when you come back. It might not.
2) No one at the dealership is holding the car for you. We’re in the business of selling cars, not holding them. We’ll sell it to the first person who puts a deposit down and moves forward.
So now it’s back to my question at the top: do you care if you lose the car or not? If you don’t, you shouldn’t be buying it in the first place. What are you doing spending thousands of dollars on something you don’t really like?
If it took you weeks or months to find it, and you really want this particular car, sit down and hammer out a deal and lock it in. Chances are the dealer isn’t making as much as you think on it anyways.
HERE IS YOUR #1 NEGOTIATION TACTIC: The competitive brand.
If you’re in a Ford dealership and tell the salesperson you are undecided between Ford and Chevy, you just saved yourself some money. You want to be cool about it, not arrogant. Just say you haven’t decided yet.
Needless to say, don’t let the salesperson know how much you are dying to buy their car. Don’t wear the brand t-shirt (you can’t imagine how many times people do this). Don’t let them spot the screen saver of your phone is their brand. Don’t so much as have a loose piece of string on your sweater in the color of their logo.
What’s helpful is to have brochures of the competitive brand sitting on the front seat of your trade in. Ladies, have them sticking out of those big bags you usually carry around.
If you want the sales manager to be motivated to make you a really great deal, have a quote in your hands from his competition. Try not to be obnoxious about it but we all know people shop around. You don’t have to waste your time going to dealers, just go online and get some quotes.
Your best negotiation tactic for sure is the competitive brand. A BMW dealer will chew off his arm before losing a sale to Audi and vice versa. Chevy will write off money before losing another customer to Dodge.
UTILITY TRUCKS: you have a little extra negotiating power because you are probably spending more on maintenance and going into service more often than leisure vehicles. Many dealerships’s bread is the service department. Selling cars is just butter. So they actually will go to cost or below to lock in a long term service customer.
DOCUMENTATION OR ADMINISTRATION FEES
These were created because the business got so competitive that dealers had to create some other way to make a few extra bucks. Can they be negotiated out? Sometimes. But pick your battles.
A higher end dealership will refuse to set a precedent by removing the fee so it’ll be a headache not worth your while. In my dealership, even if the boss’s mother buys a car, the admin fee is still on the invoice. Let the $500 or whatever the amount is sit on the invoice and just negotiate the amount out of the price of the car itself. Who cares what fees are on the invoice if the total price is good.
The total is what you care about, not the breakdown on the sales document. I’ll tell you what to really negotiate…
I’m going to make a quick mention of this now before I get to what is important. Everyone likes free mats and free this and free that. Remember how I said to pick your battles with the documentation fee? Ok, well don’t lose sight of the forest for the trees. Don’t negotiate the living hell out of getting $40 mats and a $10 baseball cap when you should be using that energy to get $2,000 off the price of the car.
One of the most annoying clients I ever had (who brought not only his angry aggressive wife but also her know-it-all idiot brother) wasted 45 minutes getting mats, cap, key tag, and coffee cup from me (grand total $64) and the whole time I had $6,000 negotiating room on the car itself.
By the way, in case your mother didn’t teach you this: freebies are never free. You are paying for it somewhere. Like “0% financing”. You think banks are generous or stupid? They’re the definition of greed. You’re paying for that “0% financing”. The dealer pays the bank and they build that money into the car so that they can show you 0% financing. You pay for it in the car. Nothing but the sun is free. Oh, and Santa isn’t real either.
I’ve seen that bad advice in magazines: “don’t finance with the dealer unless it’s 0%”. Those guys should stick to reporting sports scores or the weather. They don’t understand the business or how banks work. Nothing is free. No Santa. No Tooth Fairy.
THE 3 THINGS TO NEGOTIATE ARE THE CAR ITSELF, WARRANTY, TRADE IN
How often do we have $6,000 profit on a car that we can negotiate? Depends on the car. Common sense here: are you buying a Porsche for $78,000 or Toyota Camry for $12,000? There are a lot of variables that come into play and those variables can push the cost to the dealer either way:
- Special circumstances under which the car was bought, the person might be leaving the country and couldn’t care less and just needs to get rid of it and get on with their to-do list, so the dealer gets a great price.
- It’s a problem car for an existing client and the owner needed to sell before he got put in jail for killing the person who dumped this car on him. Dealer gets a great price.
- Corporate lease return and the depreciation values are pre-set, dealer has no choice on how much they have to pay for the car. I’ll explain: at the time of lease, let’s say 2012, the car re-buy price is set at $26,000. That’s what the contract says the dealer buys back at. 3 years later, in 2015 when it’s time to buy it back, the market has changed and the car is worth $24,000. Yeah, ouch. And it happens. We buy back at 26,000, spend $500 on dings, $300 on detail, $1,200 on inspection and certification. We now paid $28,000 for a car selling for $24,000. So we get rid of it at 24, eat the loss, and move on as quickly as possible – but that means there’s no room to negotiate there. And it does happen (don’t bother asking to see the cost invoice, we can print documents showing you anything we want here – same for screens in the computer system – you’re never going to see the real cost).
- Trade in for a much more expensive car so an extra thousand or two doesn’t phase the guy trading in, there’s wiggle room here but no way for you to know it.
- My personal favorite: it is a car bought for staff so that their ten million dollar home doesn’t have a clunker parked in the driveway. We once bought a car for $15,000 under its value because the employer didn’t want a 3 year old car in the driveway. It was a car they had bought just for the butler to run errands with.
The list goes on and on with how a car ends up on a used car lot. In some situations we completely over-pay for a car and we know it, but don’t really have a choice…
*Cough* boss’s wife who trashed the thing and it’s not worth anywhere close to what they paid for it. *Cough, cough* boss’s mistress’s car, multiply the last sentence by 2.
In other cases (not as often as we wish) we manage to get the car at a really great price and there’s room to move on it with both sides being happy.
Now here’s the million dollar point: YOU have no way of knowing what the case is. Even salespeople don’t always know what the story is, specially in huge dealerships. It’s the sales manager who does the actual purchasing that knows what’s what 100% of the time.
What your salesperson WILL know (at the end of his first trip to the manager’s office) is how much room there is to move. So it’s back to you and your salesperson.
The person that gets the best deal is the down to earth person who says “Look, I have a budget, we just bought a house/condo/whatever and I have this exact amount I can spend on a car. I really like this car, if you can make this happen I will really appreciate it and hopefully we can establish some mutual trust here and I buy cars from you for years to come.”
One of my favorite customers, the first time I sold him, said to me: “I know you need to eat. Can you survive on a good burger or does it need to be lobster and caviar?” Great line! (use that)
Now this is an intricate few minutes here when you are down to the final crunch. You don’t know what circumstances the car was bought under. You don’t know if there is any profit in it or not.
Your instinct will do a lot for you here. If you focus all your energy on just paying attention to the body language and eyes of your salesperson, you’ll get a good feeling for how hard to push. If you skip the theatrics and all the stress that comes with it, you’ll be able to pay closer attention to what’s going on and react accordingly.
Just slow the moment down and pay attention to the room. If you don’t know how to do this, watch a cat for 5 minutes as the cat is focused on something it is about to pounce on. The cat’s breathing is even, it doesn’t look right or left, it doesn’t meow or purr, it does nothing but look at the target. That’s what you want. Just slow down and pay attention.
If you got stuck with a salesperson who isn’t giving you a good feeling, your best bet is to say “I don’t want to waste your time here and appreciate your efforts, can I maybe just ask your manager myself?”.
A salesperson never cares when you want the manager; a salesperson only gets upset when they do all the work and then you go to another dealer or another salesperson and they lose all their commission.
Asking to see the manager is no problem. This gives you the chance to deal with the person who just wants to roll the numbers and move on to the next deal. Plus he knows which cars need to get off the books faster so he might even do a below-cost deal just to get the car off the lot.
If you get a good discount but it’s not exactly what you wanted, it’s not bad, doesn’t break your bank, and your instincts are telling you that the salesperson genuinely gave you their best – you might already have your best.
3 EXTRA TIPS:
1) Don’t go to the dealership hungry or extremely tired
2) Don’t spend more than 2 hours at a dealership in any one visit (we know how to wear you down). If you take a poll of who feels buyer’s remorse most, it’s usually the people who spent 5 grueling hours at a dealership and didn’t want to go through the whole ugly process again so they caved. We do it for a living and can last 5 hours. You can’t.
3) If negotiating gives you hives, create an imaginary friend (I’m not kidding). Here’s the sentence you can use no matter who you are: “My ____[wife/husband/friend/mom/dad] did the research and found other options for a little less, but I do like this car and would like to make it work. I reviewed my budget really carefully last night, I can’t do a penny more than $450/month. Help me out and let’s make this happen.”
…the thing here is that person – friend, wife, whoever – isn’t physically there, so the salesperson can’t talk them into anything. We can’t beat shadows. So that imaginary friend can become the voice you don’t necessarily feel comfortable using yourself.
People don’t realize this, but there’s untouched gold here, specially if the car isn’t a mint car. The business manager will offer to sell you warranty, but you might be able to get the dealer to GIVE it to you before ever getting to the business manager.
If you hit the wall on price of the car and are not happy about it, tell them so. See if you can get:
1) Free maintenance and oil changes for a year
2) An extra 2 years of warranty
3) If they have an extended certification program, ask for that
Here’s your line:
“Look, we’re almost there. I just need you to add some peace of mind into the deal and I’m ready to close if you do that. Get me the extended certified warranty built into this price and then I won’t need to think about it or shop around. I need to go home feeling good about what I bought.”
That sentence there is gold. And it’s worth $2,000 instead of a $10 hat.
If you’re not trading in a car, skip to the next chapter – trade-ins are all I am talking about here.
If you do have a trade-in, consider it part of the negotiations.
Trade-ins are a huge thing for dealers. In some cases, the difference between profitable and bankrupt. It’s critical for a dealer to give you the lowest amount possible on your trade-in. Trade-ins are where they get a huge chunk of their inventory and how well they buy decides if they eat spam sandwiches or t-bone steaks.
I remember my very first sales manager telling me it was part of my job to “soften the blow” to my customers before he went out to appraise their car.
He spent zero time teaching me how to sell cars, but he spent days showing me how to prepare YOU to handle a low ball offer on your trade in. So it went something like: “Sure Joe, you have a trade in? Let’s go take a look.”
Then I was supposed to do a walk around with you and point to every possible thing: “Yeah, tire scruffs, we’ll need to fix that. Ding on the bumper, no good. Chip in the windshield (that’s a legit one). Stain on the front seat. Carpets eroded. Scratches on the stereo buttons. Ding on the hood. Scratch on the bottom rocker panel. Oh look, a mosquito landed and made a dent on the roof.”
This theater is all done slowly, with a lot of sighs and words you can’t find in the dictionary: “Mmm, oh, ooooh, yipes, yowsa, doozey” along with a few words from the dictionary: “too bad, rough break there, they sure take a beating don’t they?”
So now after this gloomy walk around, you are fully prepared for some pretty bad news since I pointed out 34 things that make your car quite undesirable.
Here’s the thing: the shiny car you are buying probably looked worse than your trade in when we got it.
The dealer is going to put your car through detailing and bring in the magician (otherwise known as the dent guy) who is going to bang out all those dents. Next will come the artist (paint touch up). Then the car will have a warm bath (detailing), get a deep buff polish, and be in showroom condition.
In all fairness, there ARE costs to reconditioning a car. The dent guy needs to make a living, artist needs to eat, and if we’re talking about cars that need to be certified, yes, technicians get paid and there’s usually a fairly big manufacturer imposed fee to certify (how else does the BMW family all fly around in private jets?). The dealer does have costs. But not as bad as they’ll make it seem.
The best way to handle this is the truth. No kidding. But first you need to know the market a little.
They offer you $6,000 for your car (the key word is “offer”, you don’t have to accept it), so now what.
- A) Know the realistic numbers before you goin and that’s easy to do online. See what your year/make is being sold for at other dealers across the country. There are a lot of variables here: if you have 150,000 miles on your car, don’t compare to one with 22,000. But let’s assume you have something in the same kind of shape and it’s being retailed at $15,000 – then there’s a massive gap with the $6K they offered you. Even if they spend $2,000 reconditioning and build in a profit of another $2,000, it’s still a wide gap.
Chances are that other dealer isn’t going to get $15,000, they might get $13,000 or less, so even with worse case scenarios all around, you can still get $8,000 for your vehicle instead of 6. The trick is to know the market and have some printouts in your hands of comparable vehicles.
- B) Advertise privatelyand see what you can get. It might be way higher than what the dealer will ever give you and worth it to sell privately. Even if you still use your trade in to save on the taxes with your dealer, having the private sale numbers will help you negotiate a better offer from the dealer.
If you are equipped with fair market prices privately and in retail, plus you tell your salesperson “look, we both know you’re going to bang out all those dents and make the car look like showroom condition overnight – it’s not like I have a total clunker here, give me a decent price of $10,000 so I can get back to work and you can get on to your next sale…” That is your best bet to them talking to their manager and coming back with 8 or 9, which is what you wanted when you asked for 10.
Always ask for 10-20% more than what you think you can get. Never ever ask for the amount you think is fair. Dealers are allergic to giving you the number you ask for. They could go into shock and end up in the hospital if they give you exactly the number you start with.
INSIDER TIP: Sometimes a sales manager really wants to show a certain amount as the sales price (it affects their bonus). They will overpay for your trade-in, but keep the price of the car you are buying a little high. Who cares? All you should care about is the total (same concept as admin fees). Don’t get hung up on the details of car price or trade-in offer. Just know the net total you want to pay and get that final number.
GET IT IN WRITING
No one ever regretted having a contract. But entire empires came down due to handshake deals.
Do not go by verbal promises on anything. Not unless you have bought several cars from the same person at the same dealer and you really have zero doubt about the integrity of the relationship. I have clients who give me their credit card number and tell me to just put a deposit on the car they have asked me to look for and they don’t even bother to come see or test drive. I know their criteria, they know my integrity, and it’s a done deal. I tell them the amount they’ll need on the check when they come to pick up the car and that is the first time they see or drive it. THAT is trust. And that takes time.
Unless you have that kind of relationship, make sure you get everything in writing ON the signed agreement/offer/buy sheet (whatever that particular dealer calls it).
If you go on a test drive and there’s a ticking noise and your salesperson says “yes, we’re putting it in the shop this afternoon, don’t worry, it’ll be fixed”, whatever document you then sign and put a deposit on should have in writing: “ticking noise detected during test drive, deal contingent on this noise being fixed or contract becomes null and void, deposit 100% refundable” (EXTRA TIP: don’t forget to ask for a copy of the work order sheet on that repair). A legitimate dealer has no problem with this. Finally, do another test drive before signing final documents and taking possession of the car to make sure the noise is gone.
If you spot physical damage that has been promised to be repaired, do not just stop at getting that in writing on your deal. Get it in writing, yes, but also get visuals. Either you snap pictures of the areas in question and have an email exchange including those pictures and the same wording as the tick noise: “pictures included in this email of body/paint damage on the front right fender, driver door, and key area of trunk will be repaired by the dealer and at the dealer’s expense, deal contingent on these damages being repaired or contract becomes null and void, deposit 100% refundable”.
You see how this works? It protects you and it leaves no room for “he said, she said” later on. Just copy this sentence: “Deal contingent on issue X being repaired and included in the price of the vehicle, or contract becomes null and void, deposit 100% refundable”. It’s simple, it’s clear, and it gives you recourse if anything goes wrong.
Get absolutely everything you discuss in writing, including floor mats if that was part of your negotiation.
Seriously, no one ever regretted putting things in writing.
Don’t be shy and don’t let bad salespeople make you feel like you’re being picky. You’re the customer. You’re putting money down and have been promised something specific in return. Make sure that you are getting what you have been promised. The only way to do that is by getting it in writing.
CAUTION WITH “AS IS”
“As is” means “buy at your own risk.”
The only time “as is” might be acceptable is if it specifies that it applies to dings and scratches or something cosmetic. If you’re buying an older car and get a discount because the dealer doesn’t have to bring in a body guy or do paint touch ups, you’re fine. And if that’s the case, make sure the paperwork says so: “$500 discount, car will be delivered as seen, without paint touch ups”.
“Paint touch ups” is very different from needing a new transmission.
Even if the car is so old that there’s no warranty and it’s not certified, there’s still usually a 30-90 day warranty on all major parts. So if the engine blows 2 weeks after you bought the car, in most states and provinces, you are covered. A vague “as is” would mean you are screwed.
5 EXTRA TIPS TO AVOID PROBLEM CARS
There’s never a 100% guarantee, even if you are a master mechanic yourself. They’re cars. The newer ones are “computers on wheels” as a cool sales lady once said. Think of your cell phone: works fine for 2 years and then bam, it malfunctions without you dropping it or taking it for a swim. That’s electronics, they just fail after a while and for no real reason. The point is to bring down the risks as much as possible and tip the odds in your favor.
NOTE: A lot of information about avoiding lemons are in the chapters on reports and inspections. Make sure you read this entire guide beginning to end (yeah, I know you guys who think you’re going to shortcut with just “negotiating” and this chapter… don’t shortcut – I’ve already kept the whole thing short)
5 THINGS TO AVOID:
1) Avoid buying the first year of a release. Manufacturers usually do not have everything worked out when they release a new car. YOU are the test dummy. You’re buying a used car anyways, so the novelty of new model is gone. Unless the 1st release got perfect reviews, go for the 2nd year the model came out.
2) Avoid buying a car that was adapted for your country. Listen up tree-huggers in North America: a lot of diesels were never meant to be driven in America. They were designed for Europe but the car manufacturers adapted them because there is a demand for them, but they were not really designed with American (or Canadian) standards. You’re asking for trouble. Don’t try to fit a square peg into a round hole just because it’s cool.
3) Avoid insulting your salesperson so much that he sells you a nightmare (I feel a strong need to get this point across to you in every chapter).
4) Avoid wannabe cars that are trying to catch up to a better brand. They usually do well with knobs and stereos. Look for international engine awards. It’s hard to argue reliability on certain brands, and even certain make/models specifically. But no guarantees. It doesn’t mean Toyota never created a lemon. You’re just minimizing risk here.
5) Avoid buying an older car of a model you can’t afford. You are better off getting a quality car and just wait your turn if you can’t afford what you really want. And I get it: sun’s out, you’ve been waiting your whole life for a convertible, you just attended a “now or never” workshop. Seriously, I get it. You are the “live one” salespeople pray for every single morning. A 2 year old Solstice that is still under warranty is a better pick than a 1996 Porsche Boxster who’s warranty expired before you were born.
ALL ROADS LEAD BACK TO…
…yes, your salesperson. The people inside the dealership know the car in question. You can go around the world and back and give yourself gray hairs doing research, but at the end of the day, it is you looking at one specific car at one specific dealership and there’s a coffee sipping donut loving guy in an ugly tie standing between you and the truth.
For the record: I hate donuts, don’t drink coffee, and wear ties that would inspire Don Draper to write sexy ads.
THE BUSINESS OFFICE
Your deal is done. You’re glad it’s over. You breathe a sigh of relief and are thankful that you can relax. The rest is “just paperwork”. Not so fast Charlie. Actually, the rest is not just paperwork.
The paperwork is done in the business office with a “business manager” or whatever title that dealership uses. They’re also often called an F & I (finance and insurance).
That person is another salesperson and they make their living on the products they sell you.
This second salesperson, a.k.a. “business manager” or “finance manager”, will offer you extended warranties, tire protection, accessories, security features, etc. What they offer you will differ depending on where you live and what is available (and it’s not all evil).
I’ve had clients tell me “My god, for $500 tire protection insurance, it saved me $3000 because I had two flat tires last year, I’m glad I had it”. Don’t bother with tire protection if you’re buying a Hyundai. But think twice if you’re buying a vehicle whose tires cost $2,000 each.
In certain cities installing an alarm or GPS tracker can reduce your insurance premium and within a year it pays for itself, but then every year after that you save money on insurance. It’s a hell of a racket these alarm companies have set up with insurance companies but it’s there and if you can benefit from it, then do it.
What you want to be careful of is expensive warranties that cover almost nothing.
If you are driving a no-nonsense pick up truck, then a power-train warranty is fine. It covers the mechanics of the car and you don’t need to spend thousands more on deluxe plans.
If you are buying a sports car or high end car where the dash looks like a cockpit (some brands actually call the inside cabin of the car “the cockpit” because of all the gadgets) then a power-train warranty might not cover you. The gadgets and electronics on those cars are expensive. $3,000 and $5,000 are common for something like a navigation system, rear view camera, emission sensors, parking sensors,…
There are over 2400 parts on a standard car nowadays. Any one of those things can go at any time. Cars are not made with military grade components. If they were, a typical $20,000 car would cost $200,000.
Cars are made with standard components (same stuff as in your cell phone and xbox), there are a LOT of moving parts, and anything can go anytime. This isn’t your father’s Buick in a lot of ways.
I’m not suggesting you load up with expensive warranties, I’m just pointing out that you have to think about what you’re buying, how high tech it is, and ask yourself if you can afford it should something big go. You might be in a position to skip the warranty altogether and hopefully you aren’t buying a car beyond your means. Hopefully the car you are buying is only a few years old and still even has manufacturer warranty on it.
INSIDER TIP: The business manager can choose from different insurance companies. They always go for the one with the highest commission, not the one that is best for you. Cover yourself:
1) Carefully compare what is covered with different plans
2) Ask if the warranty can be transferred to the next owner or “follows the car” instead of owner. That helps if you resell before it expires. If not, ask them if another plan can be transferred “or maybe we should just hold off a day so I can do some research of my own on this” …and that usually sparks their memory about another option that allows warranty to be transferred (the unhappy look on their face will tell you their commission just got sliced in half).
If you are buying a car with no warranty left at all, then you have to weigh the odds of what repairs typically cost for important things on that car. Clutch, brakes, tires are all wear and tear and won’t be included anyways, but what about engine, transmission, and major electronics.
If you do buy warranty, buy one that covers you for a decent amount of time. I’ve seen expensive 6 month warranties that made no sense to me and when I asked my client why they bought it they said they were told “if something’s going to go, it’s going to be within the first few months”. Unless you bought your car from a world renowned fortune teller who does tarot readings for the Queen, there’s no way to know when anything will malfunction. FYI: business managers are often ex-car-salespeople who got tired of working long hours. What they do is just a difference kind of sale. Don’t fool yourself into thinking they are only there for paperwork.
INSIDER TIP if you are financing the car: before stepping into the business office, call your bank. Ask your bank what their loan rate is. Make sure the dealer is giving you the same or lower. If it is after hours and your bank is closed: put a deposit on the car and wait until morning to finalize whether you will finance through the dealer or your bank. 1% difference could save you thousands. If you tell the dealer you got a lower interest rate from your bank, the dealer will often match it. They sometimes add 0.5 or 1.0% to make more money (they make a commission on the financing of the car). So you definitely want to call your bank before financing.
Used Car Buying CHECKLIST
For those of you who don’t read much and skim through everything, this checklist does not replace all the points in the guide (how could it?) so make sure you have read the entire guide before going car shopping. It’s only about an hour to read everything – come on – you can do it. It’s worth your while and can save you thousands!
Consider this check list an important part of the guide too because I added additional tips here.
1) Know your budget. Decide on your total budget so you don’t get caught up in the emotion of it when you come back from your test drive.
2) Get insurance quotes. No one thinks of this, but if you are going from a Honda Accord to a BMW M6, the insurance rate might shock you. It might blow the numbers out of the sky and be out of your budget. You don’t want to fall in love with a car, go through the trouble of shopping for it, only to find out during closing that there’s no way you can afford it.
3) Know the competitive brand. Remember that is your number one negotiation tactic. Mercedes doesn’t want to lose a customer to BMW. Chevy doesn’t want to lose a customer to Ford. Dodge doesn’t want to lose a customer to Chevy. You see how this goes. Tell your salesperson you are looking at their car and the competition and trying to figure out which is best for you. They’ll do everything they can to prevent you from walking out and test driving something else.
4) Test Drive like you own the car. That means take it down the streets and highways you drive on daily and at the speed you usually drive at. Sometimes people test drive at low speeds on nicely paved roads (your dealer might be downtown while you live in the country) but then when they take possession of the car it is a nightmare to drive. INSIDER TIP: whether you live in country or city, make sure you drive at least 65MPH (100KM) because that is the speed you need to be at to hear certain rattling or whistling noises.
5) Check the Better Business Bureau to see if there have been problems with the dealer before. Do the extra homework, it’s worth it on a big purchase. Some dealers get away with murder because no one reads up on the dozens of complaints on file for them. Customer reviews you should take with a grain of salt unless there are a lot of bad reviews (with details). People who don’t get the extra hundred bucks off or whatever petty thing they wanted sometimes leave bad reviews as payback. They have nothing legit to claim with the BBB so they use the internet to voice their unhappiness. There are all kinds out there.
6) Avoid the lying scumbags. There’s still plenty of them in the business. The old timers who think there’s no way to make a living without lying. Poor guys, you see them in every dealership. They’re past retirement age and still peddling cars. I feel sorry for them, but they’re the first to lie. Second are the guys at the top (I’m the exception to this rule), usually have a lot to lose. Their numbers are posted, their pride and reputation are at stake, so they will do anything to maintain their top dog position. Third set of liars are the bottom of the barrel: they can’t sell hot chicken soup to an Eskimo with a flu, they’ll sell their sister to make a sale and it might be the only sale they make all month. Avoid those three and you’re ahead of the game. They’re easy to spot too. Look for a guy that’s older than your father, an arrogant weasel walking around like he owns the place, and the young kid with the cheap bad fitting suit who looks like he got his driver’s license 4 days ago.
7) You get more bees with honey. Don’t act like a jerk. Nothing you do is going to intimidate people who take abuse for a living (except maybe the young kid with 3 weeks experience). Chill. Be cool. You’ll get a better deal. Find a good salesperson and stick with them, they’ll do right by you.
8) Keep your eye on the ball. Don’t get distracted with a shiny key chain. Get the history report, accident report, inspection, good warranty.
9) Get all verbal agreements in writing on your deal. The whole point of an agreement is for everything “agreed upon” to be spelled out. No one ever regretted having details in writing.
10) Find out what the milestones of maintenance are. Example: timing belts usually need replacing at 65,000 miles (100,000 kms). If you are buying a vehicle that is very close to those numbers, get a new one negotiated in. Ask for an official reading on clutch, brakes, tread of tires. If they are close to dying, you’ll save a lot of time and money getting them worked into the deal. Let the guys reading online magazines for advice get their baseball cap. You’re smarter. Get new tires.
11) Relax. You’ll do all of the above better if you aren’t uptight and in defense mode. Or worse: offense mode. Remember the cat. Slow down. Pay attention to the room (if you don’t remember the cat, you skipped a chapter – go back and read it).
Congratulations, you are now a more savvy buyer and ready to make the entire experience a good one beginning to end.
The very last piece of advice I have for you: if it’s within your budget, buy a car you’ll really enjoy. People spend thousands of dollars on clothes they never wear, food they never eat, treadmills they never run on – yet they hold back on the car they really want over a few thousand dollars that are going to be financed over several years. If it’s going to cost an extra $25/month on a 5 year finance, go for it. Life’s short. Get all the pleasure you can, including what you drive every day.